Ask HN: Why do companies care about their own valuation?

Since equity based compensation is a large part of many equity packages, if the stock price was falling or at least not rising, that would be a reduction in salary. Companies like equity based compensation because of tax benefits and it generally seems cheaper since they can always issue more stock.

Loans,future investment loss, dividend loss to shareholders,C suite bonus and job performance is measured by this,etc...

You wouldn't want to give business to a company that has been losing value continually right?

Imagine if you're the CEO of the company and you own 100000 shares of it. Then your net-worth between 100$/share and 120$/share will differ by $2 million. Quite a difference, isn't? And I think most board members hold certain amount of company's stock, and usually most people want their net-worth to grow as much as possible, so they try to do certain things to increase the stock price.

That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook.

The main reasons have already been mentioned.. compensation, feedback to the CEO, etc.. but an interesting one that I just saw, and I don’t know if it’s possible, appeared on the TV Show Succession (HBO) where the family's stock in the company (which they control but not by much) secures a loan that the lender can call if the stock drops below a certain price.

Another angle to think about is the opportunity the company has to raise additional capital after IPO. All things equal, if the share price offered by the market is higher, it is cheaper for the company to raise additional capital by selling additional equity. The company will usually also have an alternative way of raising capital by taking on debt rather than selling equity.

Shareholders care deeply about valuation because it puts money in their pocket when the valuation rises.

Shareholders are the CEO's boss.

It’s a feedback to the CEO how good their company is. Buy putting a price on it (valuation), she/he gets feedback on how she/he is contributing to value increase.

in theory this factors in all aspects, e.g. more than just revenue, because it’s a comparison with other companies as well.

reality IMHO: it’s bullshit to manage short term valuation only.

Same thing with stock market, I couldn’t understand that people swapping stock amongst themselves. No money going into productive use